Barack Obama on Budget & Economy

Democratic incumbent President; IL Senator (2004-2008)

After 10 years of war, it's time for nation-building at home

After a decade of war, it's time to do some nation-building here at home. And what we can now do is free up some resources to, for example, put Americans back to work, especially our veterans, rebuilding our roads, our bridges, our schools, making sure
that, you know, our veterans are getting the care that they need when it comes to post-traumatic stress disorder and traumatic brain injury, making sure that the certifications that they need for good jobs of the future are in place.

The first lady has done great work with an organization called Joining Forces putting our veterans back to work. And as a consequence, veterans' unemployment is actually now lower than general population, it was higher when I came into office.
So those are the kinds of thtwings that we can now do because we're making that transition in Afghanistan.

Romney's plan will blow up the deficit or raise your taxes

The fact that Romney only has to pay 14% on his taxes when a lot of you are paying much higher--he's already taken that off the board, capital gains are going to continue to be at a low rate so we're not going to get money that way. Romney was a
very successful investor. If somebody came to him with a plan to spend $7 to 8 trillion, then we're going to pay for it, but we can't tell you until maybe after the election how we're going to do it, you wouldn't take such a sketchy deal and neither
should you, the American people, because the math doesn't add up. Either this blows up the deficit just to pay for the additional spending that he's talking about, $7 to 8 trillion before we even get to the deficit we already have. Or, alternatively,
it's got to be paid for, not only by closing deductions for wealthy individuals that will pay for about 4% reduction in tax rates. You're going to be paying for it. You're going to lose some deductions. Nobody who's looked at it that's serious actually b

Economic patriotism instead of top-down policies

I think we've got to invest in education and training. I think it's important for us to develop new sources of energy here in America, that we change our tax code to make sure that we're helping small businesses and companies that are investing here in
the United States, that we take some of the money that we're saving as we wind down two wars to rebuild America and that we reduce our deficit in a balanced way that allows us to make these critical investments.

Now, it ultimately is going to be up to the voters, to you, which path we should take. Are we going to double-down on the top-down economic policies that helped to get us into this mess?
Or do we embrace a new economic patriotism that says America does best when the middle class does best? And I'm looking forward to having that debate.

$5T in tax cuts & $2T on defense is failed recipe from 2003

OBAMA: Gov. Romney's proposal calls for a $5 trillion tax cut, that he is going to pay for it by closing loopholes and deductions. When you add up all the loopholes and deductions that upper-income individuals are currently taking advantage of, you don't
come close to paying for $5 trillion.

ROMNEY: If the tax plan he described were a tax plan I was asked to support, I'd say absolutely not. What I've said is I won't put in place a tax cut that adds to the deficit. So there's no economist that can say
Mitt Romney's tax plan adds $5 trillion if I say I will not add to the deficit with my tax plan.

OBAMA: Well, for 18 months he's been running on this tax plan. It is not possible to come up with enough deductions and loopholes to avoid either raising
the deficit or burdening the middle class. It's math. It's arithmetic. Look, we've tried this. Gov. Romney's approach is the same sales pitch that was made in 2001 and 2003, and it all culminated in the worst financial crisis since the Great Depression.

Deficit came from two wars paid for on a credit card

OBAMA: When I walked into the Oval Office, I had more than a trillion-dollar deficit greeting me. And we know where it came from: two wars that were paid for on a credit card; two tax cuts that were not paid for; and a whole bunch of programs that were
not paid for; and then a massive economic crisis. We had to take some initial emergency measures to make sure we didn't slip into a Great Depression, but what we've also said is, let's make sure that we are cutting out those things that are not helping
us grow. And we cut a trillion dollars out of our discretionary domestic budget. That's the largest cut in the discretionary domestic budget since Dwight Eisenhower. Now, we all know that we've got to do more. And so I've put forward a specific $4
trillion deficit reduction plan. It's on a website. You can look at all the numbers, what cuts we make and what revenue we raise.

ROMNEY: You've been president four years. You said you'd cut the deficit in half. We still have trillion-dollar deficits.

You elected me to tell the truth:The path ahead is hard

I won't pretend the path I'm offering is quick or easy. I never have. You didn't elect me to tell you what you wanted to hear. You elected me to tell you the truth.

And the truth is, it will take more than a few years for us to solve challenges that
have built up over decades. It'll require common effort, shared responsibility, and the kind of bold, persistent experimentation that Franklin Roosevelt pursued during the only crisis worse than this one.

But know this, America: Our problems can be
solved. Our challenges can be met. The path we offer may be harder, but it leads to a better place. And I'm asking you to choose that future. I'm asking you to rally around a set of goals for your country, goals in manufacturing, energy, education,
and the deficit; real, achievable plans that will lead to new jobs, more opportunity, and rebuild this economy on a stronger foundation.

That's what we can do in the next 4 years, and that's why I'm running for a second term as President.

House of cards collapsed in 2008; new rules now in place

Long before the recession, jobs and manufacturing began leaving our shores. Folks at the top saw their incomes rise like never before, but most hardworking Americans struggled.

In 2008, the house of cards collapsed. We learned that mortgages had been
sold to people who couldn't afford or understand them. Banks had made huge bets and bonuses with other people's money. Regulators didn't have the authority to stop the bad behavior. It was wrong. It was irresponsible. And it plunged our economy into a
crisis that put millions out of work, and saddled us with more debt. In the 6 months before I took office, we lost nearly 4 million jobs. And we lost another 4 million before our policies were in full effect.

Those are the facts. But so are these.
In the last 22 months, businesses have created more than three million jobs. Together, we've agreed to cut the deficit by more than $2 trillion. And we've put in place new rules to hold Wall Street accountable, so a crisis like that never happens again.

We don't need a Constitutional amendment to balance budget

Senate Majority Leader Harry Reid called Cut, Cap, and Balance the worse legislation in history, and the President condemned a balanced budget amendment to the Constitution as extreme. Obama arrogantly said, "We don't need a constitutional amendment to
do our job." Well, Mr. President, yes, in fact, we do need an amendment. How has Congress "doing its job" of spending taxpayer dollars wisely worked out for America? The truth is, Washington hasn't been doing its job for a very long time.

Hundreds of conservative organizations and Tea Party groups got behind the responsible Cut, Cap, and Balance plan. After the House passed it with a large majority (including 5 Blue Dog Democrats) Senator Reid promised a full debate in the Senate.

Many polls showed increased public support for the bill and a balanced budget amendment. Over 70% of Americans supported a balanced budget amendment to the Constitution, and a CNN poll found 66% of Americans supported the Cut, Cap, and Balance bill.

Obama economic stances compared to Romney

Do Obama and Romney disagree on school vouchers? (Yes). Do they both like "No Child Left Behind"? (No).
We cite details from Romney's books and speeches, and Obama's, so you can compare them, side-by-side, on issues like these:

Appoint bipartisan fiscal commission and re-establish PAYGO

We know that we've got a major fiscal challenge in reining in deficits that have been growing for a decade, and threaten our future. That's why I've proposed a three-year freeze in discretionary spending other than what we need for national security.

At this point, we know that the budget surpluses of the '90s occurred in part because of the pay-as-you-go law, which said that, well, you should pay as you go and live within our means, just like families do every day. 24 Republicans voted for that, and
I appreciate it. And we were able to pass it in the Senate yesterday.

But the idea of a bipartisan fiscal commission to confront the deficits in the long term died in the Senate the other day.
So I'm going to establish such a commission by executive order and I hope that you participate, fully and genuinely, in that effort, because if we're going to actually deal with our deficit and debt.

Some earmarks are defensible, if done in full light of day

Rep. CHAFFETZ: When you said in the House of Representatives that you were going to tackle earmarks--in fact, you didn't want to have any earmarks in any of your bills--I jumped up out of my seat and applauded you. But it didn't happen.

Pres. OBAMA:
We didn't have earmarks in the Recovery Act. We didn't get a lot of credit for it, but there were no earmarks in that. I was confronted at the beginning of my term with an omnibus package that did have a lot of earmarks from Republicans and Democrats when
we had to make a whole bunch of emergency decisions about the economy. So what I said was let's keep them to a minimum, but I couldn't excise them all. I think all of us are willing to acknowledge that some earmarks are perfectly defensible, good
projects; it's just they haven't gone through the regular appropriations process in the full light of day. So one place to start is to make sure that they are at least transparent, that everybody knows what's there before we move forward.

Some wealth of the last economic boom was illusory

The Fed has one power that is unique to it alone: it enables the creation of money out of thin air. We are talking about an awesome power. It is the power to weave illusions that appear real as long as they last. That is the very core of the
Fed's power.

As Pres. Obama said of the economic boom that went bust: "I think it's important to understand that some of that wealth was illusory in the first place."

Exactly. But let's also understand the source of the illusion and what to
do about it. Of course not everyone is instinctively against this illusion-weaving power, and many even welcome it. They just want to get back to the times when "everything was good" even though it was all just a mirage--a creation of the appearance
of wealth by the Fed.

Tragically, the innocent who understand little about the complexity of the monetary system suffer the most, while those who are in the know reap great profit whether the market is going up or down.

Bottom-up economics instead of trickle-down economics

Obama explained that a healthy economy is a bottom-up economy, not a top-down economy dependent on trickle-down economics. In a bottom-up economy, the rules of business and government are fair and apply to all. There is a level playing field.
In such an environment, people's enthusiasm and motivations are maximized. They feel that their personal success will be determined by their hard work and effort, not by who they know or who they are related to.
Obama believes that they key to a growing and prosperous economy is a motivated workforce that is engaged and constantly thinking about how it can improve itself, its company's products and services, and its country.

Obama believes that all will
benefit from the system he envisions, that Wall Street & Main Street are intertwined, that you can't have successful securities investing without successful companies to invest in, and you can't have successful companies without motivated engaged workers

Focus on economic justice instead of macroeconomic policy

"The true genius of America, a faith--a faith in simple dreams, an insistence on small miracles; that we can tuck in our children at night and know that they are fed and clothed and safe from harm; that we can say what we think, write what we think,
without hearing a sudden knock on the door; that we can have an idea and start our own business without paying a bribe; that we can participate in the political process without fear of retribution, and that our votes will be counted--at least most of the
time."

These words are from Barack Obama's major economic policy speech on Feb. 13, 2008. It had a completely different focus than the macroeconomic issues we are used to hearing discussed in Washington. Rather, he focused his remarks on what, for him,
is the most pressing need today in America, the need for economic justice. To a great degree, much of Barack Obama's platform for America is about a singular issue, economic justice.

OpEd: "Hope" translates into economic opportunity

"I'm not talking about blind optimism here--the almost willing ignorance that thinks unemployment will go away if we just don't think about it, or the health care crisis will solve itself if we just ignore it. That's not what I'm talking about.
I'm talking about something more substantial, It's the hope of slaves sitting around a fire singing freedom songs; the hope of immigrants setting out for distant shores; the hope of a skinny kid with a funny name who believes that America has a place for
him, too. Hope--Hope in the face of difficulty. Hope in the face of uncertainty. The audacity of hope."

Many of us remember these striking words as the keynote speaker at the 2004 Democratic Nominating Convention. If there is one word associated with
Barack Obama, from all of his campaigns, speeches and books, it would have to be hope. From an economic perspective, the word hope easily translates into economic opportunity. Without economic opportunity, there is no hope.

Take China “to the mat” about currency manipulation

Q: You had said that if China is actually manipulating their currency, the US needs to “take them to the mat.” What exactly did you mean by that?

A: We have legislation that says that if, in fact, they are manipulating their currency--and
I think there’s no dispute that they are--that we need to take strong action. It’s in the Banking Committee. I will say that it’s actually a blunt tool. I’d prefer not doing this legislatively.
The problem is we’ve had a president that has shown no leadership on it. So when I am in the White House, I will meet directly with the Chinese leadership and indicate we have to restore balance.
And, by the way, we have to mobilize our allies, such as the European Union, to have that conversation with us. This is an imbalance that is not good for any economy over time. It’s not sustainable, the trade imbalances that we have.

Supports federal programs to protect rural economy

Our rural communities are the backbone of Illinois. Yet, factories have closed, jobs have disappeared, and homes and farms have been foreclosed upon. Effective federal programs are necessary to protect the rural economy.

Freeze annual domestic spending for next five years

Now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same.

This freeze will require painful cuts. Already, we've frozen the salaries of hardworking federal employees for the next two years. I've proposed cuts to things I care deeply about, like community action
programs. The Secretary of Defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without.

The worst has passed, but the devastation remains

One year ago, I took office amid two wars, an economy rocked by a severe recession, a financial system on the verge of collapse, and a government deeply in debt. Experts from across the political spectrum warned that if we did not act, we might face a
second depression. So we acted--immediately and aggressively. And one year later, the worst of the storm has passed.

But the devastation remains. One in 10 Americans still cannot find work. Many businesses have shuttered. Home values have declined.
Small towns and rural communities have been hit especially hard. And for those who'd already known poverty, life has become that much harder.

This recession has also compounded the burdens that America's families have been dealing with for decades--the
burden of working harder and longer for less; of being unable to save enough to retire or help kids with college.

So I know the anxieties that are out there right now. They're not new. These struggles are the reason I ran for President.

Barack Obama on Financial Bailout

OpEd: Each bailout revealed more of Washington's inside game

TARP opened the floodgates for a wave of unaccountable spending that flowed out of Washington. Soon afterward, President Obama bailed out the auto industry to rescue big labor. His allies in Congress passed the
$787 billion stimulus bill, most of them without having read it. And he forced through a trillion-dollar heath care takeover. With each bailout, more and more of us felt we were getting further and further from what
America was meant to be: a free and striving people with a limited and accountable government. Instead, Washington was revealing itself to be an inside game, with the rules fixed to benefit the establishment.
The rules favor the well connected, while the rest of us in flyover country pay the bills.

Push mortgage refinancing; banks repay deficit of trust

Millions of innocent Americans have seen their home values decline. And while Government can't fix the problem on its own, responsible homeowners shouldn't have to sit and wait for the housing market to hit bottom to get some relief.

That's why
I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks.
A small fee on the largest financial institutions will ensure that it won't add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust.

Let's never forget: Millions of Americans who work hard and play
by the rules every day deserve a Government and a financial system that do the same. It's time to apply the same rules from top to bottom: No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody.

Establish a Financial Crimes unit; end era of recklessness

I will not go back to the days when Wall Street was allowed to play by its own set of rules. If you're a big bank or financial institution, you are no longer allowed to make risky bets with your customers' deposits. You're required to write out a "living
will" that details exactly how you'll pay the bills if you fail--because the rest of us aren't bailing you out ever again. And if you're a mortgage lender or a payday lender or a credit card company, the days of signing people up for products they can't
afford with confusing forms and deceptive practices are over.

We will also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people's investments. Some financial firms violate major
anti-fraud laws because there's no real penalty for being a repeat offender. That's bad for consumers, and it's bad for the vast majority of bankers and financial service professionals who do the right thing.

Recession because Wall St. and Washington failed us

Obama hoped to connect with the unemployed despite holding the country's most prestigious job; to disparage Washington politics despite being a product of them; to have a self-described "direct conversation with the folks of New Hampshire."

"We've gone
through the deepest recession since the Great Depression, and folks here have had their lives uprooted by lost jobs and foreclosed homes, shuttered businesses, vanished savings," he said. "Many good, hardworking people who met their responsibilities are
now struggling, in part because folks on Wall Street and people in Washington didn't meet their responsibilities. Now, these are the things that I hear about every day in the letters
I get--from families going bankrupt; from small businesses crushed by their health-care costs. I am not going to walk away from these efforts. I am not going to walk away from these people."

2008 financial collapse: final verdict on failed philosophy

"What we've seen the last few days," Obama asserted [during the financial crisis in late summer 2008], "is nothing less than the final verdict on this philosophy, a philosophy that has completely failed. And I am running for president because the dreams
of the American people must not be endangered anymore. It's time to put an end to a broken system in Washington that is breaking the American economy. It's time for change that makes a real difference in your lives."

[Federal Reserve chair Bernanke addressed Congressional leaders]: "I am a student of the Great Depression," he began. "Let me state this clearly. If we do not act in the next few days, this will be worse than the Great Depression."
He let the statement sink in, just long enough for Senator Chris Dodd to gasp audibly, before he continued: "Investors have lost confidence in our capital markets. It is a matter of days before we will witness a series of catastrophic failures."

OpEd: Undermined message of restraint with new "investments"

Pres. Obama spoke boldly of the need for spending restraint in his 2011 State of the Union Address. "Every day, families sacrifice to live within their means," he declared. "They deserve a government that does the same." However, in the very same speech
Obama undermined this message by advocating a host of new federal spending measures--using the euphemism "investments"--to speed up our economic recovery.

This was the same argument Obama used to justify his exorbitant $800 billion "stimulus" program.
Although that spending binge failed to improve the economy, with unemployment rising from 7.6% when the stimulus passed to roughly 9% today, it looks like Obama's prescription is more of the same. A few weeks after his State of the Union speech, Obama
proposed a budget with yet another record deficit--one exceeding $1.65 trillion. Unsurprisingly, as I write these words, the federal government hit its debt ceiling, sparking demands from the Obama administration to raise the ceiling even higher.

OpEd: Economy recovering, but not feeling it on the street

Printing, borrowing and spending money is one thing. But bashing the prior President and doing the same thing is another. Obama has blamed the state of the economy on
Bush, but there is only so much blaming before people demand that the economy improves. Obama has declared that the economy is recovering and improving, but the feeling on the street is that the economy does not seem to be getting much better.
There is still high unemployment and the housing sector continues to get worse. Gas prices and many other commodity prices are near their highs, and wages are not keeping up.
The economy will be the biggest factor in the general election. If the economy improves, then there will be a competitive race.

OpEd: Crisis means Obama won, but world's falling apart

With the 2008 economic crisis, the candidate chuckled to his senior staff, "The good news is we're gonna win. The bad news is the world's falling apart."

The crisis was good news for him in another way. Suddenly there was a clear and historic purpose
to the first year of an Obama presidency: to stop the bleeding and place the nation on a sharply different course. Instead of letting go of his big campaign promises on energy, health care, and education, he now sought to connect them to the recession.

Worked on TARP & bank bailouts during 2008 transition

Obama had inherited a nightmare in 2008. He would need to act boldly to keep the country from being swamped by its problems. Never before in American history did a president-elect make so many presidential-level decisions before being sworn in. Obama
signed off on the largest public investment since WWII and lobbied a huge bank rescue bill through Congress while he was still technically a private citizen. (He had resigned from the Senate shortly after the election.)

During the 1932-33 transition,
FDR's strategy was to spurn efforts to cooperate with Hoover. Obama consciously chose a different course, at least on the banks. "I explicitly rejected FDR's strategy of not taking any ownership of what needed to be done during the transition and
I think that was the right decision," he said later. "If I had refused to weigh in on TARP prior to my being sworn in--we would not have hit the ground running. And I think the situation could have spiraled out of control much more severely."

We all hated the bank bailout; but it was necessary

Our most urgent task upon taking office was to shore up the same banks that helped cause this crisis. It was not easy to do. And if there's one thing that has unified Democrats and Republicans, and everybody in between, it's that we all hated the bank
bailout. I hated it. You hated it. It was about as popular as a root canal.

But when I ran for President, I promised I wouldn't just do what was popular--I would do what was necessary. And if we had allowed the meltdown of the financial system,
unemployment might be double what it is today.

So I supported the last administration's efforts to create the financial rescue program. And when we took that program over, we made it more transparent and more accountable. And as a result, the markets
are now stabilized, and we've recovered most of the money we spent on the banks. Most but not all.

To recover the rest, I've proposed a fee on the biggest banks. I am not interested in punishing banks. I'm interested in protecting our economy.

$1T avoided Depression; but I took office with $8T debt

Let me start the discussion of government spending by setting the record straight. At the beginning of the last decade, the year 2000, America had a budget surplus of over $200 billion. By the time I took office, we had a one-year deficit of over
$1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program. On top of that, the effects of the recession put a
$3 trillion hole in our budget. All this was before I walked in the door.

Just stating the facts. Now, if we had taken office in ordinary times, I would have liked nothing more than to start bringing down the deficit. But we took office amid a crisis.
And our efforts to prevent a second depression have added another $1 trillion to our national debt. That, too, is a fact. I'm absolutely convinced that was the right thing to do.

FactCheck: Obama's estimate of $8T deficit is closer to $3T

Republicans laughed when Obama described the huge deficits he had inherited when he took office. Despite the Republican scoffing, Obama's claims are backed up by the historical record--mostly. [Looking at each fact that Obama cited]:

Obama: "In 2000,
America had a budget surplus of over $200 billion."

FactCheck: Fiscal year 2000 ended with a total budget surplus of $237 billion.

Obama: [By 2009] "a one-year deficit of over $1 trillion."

FactCheck: Deficit when Obama took office: CBO projected
the deficit would total $1.2 trillion.

Obama: [By 2009, we had] "projected deficits of $8 trillion over the next decade."

FactCheck: CBO projected only a $3.1 trillion deficit over 10 years.

So the president actually understated matters regarding
annual surpluses and deficits for years past, but he may have strained the facts when he spoke of what was being predicted for future years. His figure is based on a "baseline" projection by Obama's own OMB projecting a 10-year deficit of $8.9 trillion.

Sep. 2008 summit: bailout deal needs oversight & flexibility

[At the White House crisis meeting that McCain called], Obama had strategized extensively with Reid and Pelosi, who agreed to defer to him. Obama had no agenda to push; he was annoyed at having to be there rather than preparing for the debate. The meetin
took place in the Cabinet Room.

Obama took the floor and ticked off four items central to the bill: executive compensation, golden parachutes, oversight, and flexibility. "I think just about everyone has agreed on these, " he said, then added a sly di
at the House Republicans. "I understand there are some who may not be as far along as the rest of us. We can argue about how we got here, but that's not the issue," Obama went on. "The issue is how to solve the problem."

[McCain said little].
McCain told his aides the reason he was silent was that, from the moment the Democrats deferred to Obama, he knew that the meeting would accomplish nothing.

US will emerge from this recession, stronger than before

For many Americans, the state of our economy is a concern that rises above all others. And rightly so. If you haven't been personally affected by this recession, you probably know someone who has. You don't need to hear another list of statistics to know
that our economy is in crisis, because you live it every day. The impact of this recession is real, and it is everywhere.

But while our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times,
tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before.

The answers to our problems don't lie beyond our reach. They exist in our laboratories
and our universities; in our fields and our factories; in the imaginations of our entrepreneurs. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more.

Not enough to help those at the top: it doesn’t trickle down

Q: What’s the fastest solution to bail people out of economic ruin?

OBAMA: It’s not enough just to help those at the top. Prosperity is not just going to trickle down. We’ve got to help the middle class. Part of the problem is that for many of you,
wages and incomes have flat-lined. For many of you, it is getting harder and harder to save, harder and harder to retire. Sen. McCain is right that we’ve got to stabilize housing prices. But underlying that is loss of jobs and loss of income.
That’s something that the next treasury secretary is going to have to work on.

McCAIN: We obviously have to stop this spending spree that’s going on in Washington. Do you know that we’ve laid a $10 trillion debt on young Americans,
$500 billion of it we owe to China? We’ve got to have a package of reforms and it has got to lead to reform prosperity and peace in the world. And I think that this problem has become so severe, that we’re going to have to do something about home values.

Pay attention to Main Street, not just Wall Street

OBAMA: Ten days ago McCain said the fundamentals of the economy are sound. Unless we are holding ourselves accountable day-in, day-out, not just when there’s a crisis for folks who have power and influence and can hire lobbyists but for the nurse, the
teacher, the police officer who frankly at the end of each month, they’ve got a little financial crisis going on. They’re having to take out extra debt just to make their mortgage payments. We haven’t been paying attention to them.

McCAIN: We’ve got
fundamental problems in the system. And Main Street is paying a penalty for the excesses and greed in Washington, DC, and in the Wall Street. There’s no doubt that we have a long way to go, and obviously stricter interpretation and consolidation of the
various regulatory agencies that weren’t doing their job that has brought on this crisis. But I have a fundamental belief in the goodness and strength of the American worker. And the American worker is the most productive, the most innovative.

Decide financial rescue plan on future slower tax revenues

Q: What are you going to have to give up, in terms of the priorities that you would bring as president, as a result of having to pay for the financial rescue plan?

A: There are a range of things that are probably going to have to be delayed. We don’t
yet know what our tax revenues are going to be. The economy is slowing down. So it’s hard to anticipate right now what the budget’s going to look like next year. But there’s no doubt that we’re not going to be able to do everything that needs to be done.

Regulate institutions for what they do, not what they are

Deregulated financial markets create a needless Hobson's choice: Either let banks suffer the folly of their own mistakes; or keep bailing out banks & invite more speculative bubbles. But there is a third alternative: Complement necessary rescues with
more stringent supervision and regulation, so speculative bubbles stop occurring. As Obama put it last March: "Our history should give us confidence that we don't have to choose between an oppressive government-run economy and a chaotic and unforgiving
capitalism. We need to regulate institutions for what they do, not what they are. Over the last few years, commercial banks and thrift institutions were subject to guidelines on subprime mortgages that did not apply to mortgage brokers and companies. It
makes no sense for the Fed to tighten mortgage guidelines for banks when 2/3 of subprime mortgages don't originate from banks. This regulatory framework has failed to protect homeowners, and it is now clear that it made no sense for our financial system.

Free market needs proper government oversight

"It's useful to remind ourselves that our free market system is the result neither of natural law nor of Divine Providence. Rather, it emerged through a painful process of trial and error. And although the benefits of our free market system are mostly
derived from the individual efforts of generations of men and women pursuing their own vision of happiness, in each and every period of great economic upheaval and transition we depended on government action to open up opportunity, encourage competition,
and make the market work better."

Obama's overall economic philosophy: He understands the power of the free market to create jobs and encourage creativity, but he also understands that, left to its own devices, without proper government oversight, it
has a way of bouncing wildly between booms and busts. Individual participants in a market economy can do little to influence the overall stability of the system, but government can, and must, act to assure our financial markets remain strong and stable.

Prosecute mortgager fraud; require full mortgage disclosure

Proposals Obama has made to address predatory lending and fraudulent activity in the mortgage and credit card business:

Protect homeownership and crack down on mortgage fraud: Obama will make sure homebuyers have honest and complete information
about their mortgage options.

Ensure more accountability in the subprime mortgage industry: Obama's STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new
criminal fraud penalties for mortgage professionals, and requires industry insiders to report suspicious activity.

Mandate accurate loan disclosure: Obama will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential
borrowers with a simplified, standardized borrower metric for home mortgages.

Close bankruptcy loophole for mortgage companies: Obama will eliminate the provision that prevents bankruptcy courts from modifying an individual's mortgage payment.

Latinos & blacks are hardest hit by housing & gas crises

For eight long years, Washington hasn’t been working for ordinary Americans. And few have been hit harder than Latinos and African Americans. You know what I’m talking about. Like a couple I met in Las Vegas who were tricked into buying a home they
couldn’t afford. You know about the families all across this country who are out of work, or uninsured, or struggling to pay rising costs for everything from a tank of gas to a bag of groceries. And that’s why you know that we need change in this country

Source: Obama & McCain back-to-back speeches at NALEO
, Jun 28, 2008

More accountability in subprime mortgages

Ensure More Accountability in the Subprime Mortgage Industry:Obama introduced comprehensive legislation over a year ago to protect consumers against abusive lending practices. Obama’s STOP FRAUD Act provides the first federal definition of
mortgage fraud, increases funding for law enforcement, and creates new criminal penalties for mortgage fraud.

Create a Universal Mortgage Credit:Obama will create a 10% universal mortgage credit to provide tax relief to homeowners who do not
itemize. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.

Mandate Accurate Loan Disclosure: Obama will create a Homeowner Obligation Made Explicit (HOME) score, which
will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.

Help the homeowners actually living in their homes

It is important to make sure that we’re not helping out the speculators, but instead are helping out the homeowners who are actually living in their homes, who have the capacity to make the payments if they’re not seeing a huge increase in their mortgage
payments. But understand this, this is not new. We have a history in this country of preying on low-income peoples because they don’t have access to banks. The Community Reinvestment Act is oftentimes not enforced as it should be. We’ve got to open up
bank branches. We’ve got to give people access to financing so that they’re not going to a payday loan operation. I two years ago introduced a provision that would eliminate predatory lending, something that I had already helped to get passed at the
state level. We’ve got to give ordinary working people access to financing. Part of the reason that they are borrowing on their homes, they’re borrowing on credit cards, is that the banks and financial institutions have dominated policy in Washington.

Capping credit card interest rates at 30% is not enough

I thought 30 percent potentially was too high of a ceiling. So we had had no hearings on that bill. It had not gone through the Banking Committee. I don’t know about a lot of folks, if they’ve got a credit card, are paying 29 percent. So under this
provision, that would’ve been fine. There had been no discussion about how we were going to structure this and this was something that had not gone through the committee and we hadn’t talked about. It didn’t make sense for us to cap interest rates.

Release people in bankruptcy due to health care problems

We have to release people who are in bankruptcy as a consequence of health care. We’ve got to give them a break.

Source: 2008 Democratic debate in Las Vegas
, Jan 15, 2008

Accountability and oversight over the financial markets

The sub-prime lending mess, part of the reason it happened was because we had an administration that does not believe in any kind of oversight. You’ve got to disclose if you’ve got a teaser rate and suddenly their mortgage payments are going to
jack up & they can’t pay for them. I intend to restore a sense of accountability and regulatory oversight over the financial markets. We have the best financial markets in the world, but only if they are transparent and accountable and people trust them.

Source: 2008 Democratic debate in Las Vegas
, Jan 15, 2008

Modify some of the fraudulent & predatory lending practices

We’ve got to modify some fraudulent & predatory lending practices. I put in a bill to make that happen because it does affect communities. Unless we are able to rid the influence of special interest lobbies, we’re going to continue to see bad
legislation like that. I’ve put forward a $10 billion housing fund that can help bridge people who have been responsible in making their payments. We’ve got to make sure they can get the kinds of help they need to stay in their homes & make the payments.

Source: 2008 Democratic debate in Las Vegas
, Jan 15, 2008

Bush & GOP dug budget hole; need years to dig out

Q: Would it be a priority of your administration to balance the federal budget every year?

A: Over the last seven years, what we’ve seen is an economy that’s out of balance because of the policies of George Bush and the Republicans in Congress.
Not only do we have fiscal problems, but we’ve got growing inequality. People are working harder for less and they’re seeing costs go up. So what I want to do is get the long-term fundamentals right. That means that we are investing in education
& infrastructure, structuring fair trade deals, and also ending the war in Iraq. That is money that can be applied at home for critical issues.

Q: So a priority to balance the federal budget, or not?

A: We are not going to be able to dig ourselves out
of that hole in 1 or 2 years. But if we can get on a path of sustained growth, end the war in Iraq, end some of the special interest loopholes and earmarks that have been clogging up the system, then I think we can return to a path of a balanced budget.

Regulate financial instruments to protect home mortgages

Q: [to Dodd]: The Fed lowered the discount rate for banks to address the mortgage crisis. Should they lower rates for everyone else?

DODD: Yes, but we also need more liquidity in the market. It has seized up. You can’t get a mortgage in America today.

OBAMA: We do need more liquidity, but we’re going to have to not only help home owners who are going to be losing their homes as a consequence of this; we’re going to have to make sure that we’ve got the kinds of tough regulation when it comes to
financial instruments to make sure that people who have saved and are trying to get their own home for the first time are not hoodwinked out of it. And, unfortunately, the reason that we haven’t had tougher regulation in part goes back to the issue of
lobbying. This is where special interests have been driving the agenda. We have not had the kinds of consumer protections that are in place. That’s why, when we have this debate about lobbying, we have to remind ourselves it has very real consequences.

Government regulation needed for when markets fail

In the era of George Bush’s running up huge federal deficits, Obama advocated fiscal restraints, calling for pay-as-you-go government. He waxed on about the power of the free market to create wealth and change lives. But he also had an afterthought on a
market-based economy straight from liberal economist Paul Krugman: “Sometimes markets fail, and that’s when labor laws and government regulation are necessary correctives.” In other words, he was saying that capitalism is magnificent, but it does have
its drawbacks. It would be hard for anyone to argue with such a balanced statement. “Obama figures out ways to present himself like a conservative to conservatives.”
Said [one advisor]. “He has the whole venture capital industry here in Chicago, nothing but Republicans, thinking he is their champion. He has supported entrepreneurship. It is a pro-growth message.”

Barack Obama on Stimulus Package

We neglect nation-building here when we nation-build abroad

OBAMA: We have to do is recognize that we can't continue to do nation building. Part of American leadership is making sure that we're doing nation building here at home. That will help us maintain the kind of American leadership that we need.

ROMNEY: For us to be able to promote peace requires us to be strong, and that begins with a strong economy here at home.

OBAMA: [When considering Mideast policy], what is also important for us to understand, is that for
America to be successful in this region, there are some things that we're going to have to do here at home as well. You know, one of the challenges over the last decade is we've done experiments in nation building in places like Iraq and Afghanistan.
And we've neglected, for example, developing our own economy, our own energy sectors, our own education system. And it's very hard for us to project leadership around the world when we're not doing what we need to do here.

OpEd: Stimulus vote turned GOP into "party of No"

President Obama and his spokespeople would describe our opposition to the stimulus bill as our coming out as the party of "no." He accused us Republicans of making a calculated, political decision to oppose him on the stimulus bill instead of doing what
was right for the country. He charged then (incorrectly), as he later would repeatedly, that we had already made the decision to oppose the stimulus bill before we even heard his proposals.

But sometimes saying "No" is what's right for this country--an
all 178 Republican members said just that to President Obama, Speaker Pelosi, and Leader Reed's pork-laden stimulus package.

In a sense, President Obama had been correct when he identified the stimulus vote as a turning point--he was just wrong about
what message it sent to the American people. Far from revealing us as the party of "no," our solidarity in the face of the majority party's bullying tactics revealed us to be an awakening movement of responsible leaders.

Recovery Act averted a second Great Depression

Let's start with our efforts to jumpstart the economy last winter, when we were losing 700,000 jobs a month. Our financial system teetered on the brink of collapse and the threat of a second Great Depression loomed large. I didn't understand then, and
I still don't understand, why we got opposition in the Republican caucus for almost $300 billion in badly needed tax cuts for the American people, or COBRA coverage to help Americans who've lost jobs in this recession to keep the health insurance that
they desperately needed, or opposition to putting Americans to work laying broadband and rebuilding roads and bridges and breaking ground on new construction projects.

Well, that's what the Recovery Act was. Now,
I am happy to report this morning that we saw another sign that our economy is moving in the right direction. The latest GDP numbers show that our economy is growing by almost 6%--that's the most since 2003.

Across-the-board tax cuts wouldn't stimulate economy

Rep. PENCE: The so-called stimulus bill was a piecemeal list of projects and boutique tax cuts. Now, Republicans offered a stimulus bill at the same time. It cost half as much as the Democratic proposal, and it would have created twice the jobs.
It essentially was across-the-board tax relief.

Pres. OBAMA: This notion that this was a radical package is just not true. A third of them were tax cuts, and they weren't--when you say they were "boutique" tax cuts--95% of working
Americans got tax cuts, small businesses got tax cuts, large businesses got help in terms of their depreciation schedules. I mean, it was a pretty conventional list of tax cuts. And the notion that I would somehow resist doing something that cost half
as much but would produce twice as many jobs--why would I resist that? I wouldn't. I am not an ideologue. The problem is, I couldn't find credible economists who would back up the claims that you just made.

Increased spending comes from Bush's automatic stabilizers

Rep. RYAN: The spending bills that you've signed into law, the domestic discretionary spending has been increased by 84%. You now want to freeze spending at this elevated beginning next year.

Pres. OBAMA: I want to just push back a little bit on the
underlying premise about us increasing spending by 84%. The fact of the matter is, is that most of the increases in this year's budget, this past year's budget, were not as a consequence of policies that we initiated but instead were built in as a
consequence of the automatic stabilizers that kick in because of this enormous recession. So the increase in the budget for this past year was actually predicted before I was even sworn into office and had initiated any policies.

Rep. RYAN: I would simply say that automatic stabilizer spending is mandatory spending. The discretionary spending, the bills that Congress signs that you sign into law, that has increased 84%.

Spending freeze now would be destimulative; later is better

Rep. RYAN: Total spending in your budget would grow at 0.03% less than otherwise. I would simply submit that we could do more and start now. Why not start freezing spending now?

Pres. OBAMA: The reason that I'm not proposing the discretionary freeze take into effect this year is, I am just listening to the consensus among people who know the economy best.
And what they will say is that if you either increase taxes or significantly lowered spending when the economy remains somewhat fragile, that that would have a
destimulative effect and potentially you'd see a lot of folks losing business, more folks potentially losing jobs. We'll have a longer debate on the budget numbers, all right?

Restore Pay-As-You-Go law

The Senate should restore the pay-as-you-go law that was a big reason for why we had record surpluses in the 1990s.

Now, I know that some in my own party will argue that we can't address the deficit or freeze government spending when so many
are still hurting. And I agree--which is why [the proposed 3-year spending] freeze won't take effect until next year--when the economy is stronger. That's how budgeting works.

But understand, if we don't take meaningful steps to rein in our debt,
it could damage our markets, increase the cost of borrowing, and jeopardize our recovery--all of which would have an even worse effect on our job growth and family incomes.

Rather than fight the same tired battles that have dominated
Washington for decades, it's time to try something new. Let's invest in our people without leaving them a mountain of debt. Let's meet our responsibility to the citizens who sent us here. Let's try common sense. A novel concept.

OpEd: Stimulus trillions must be borrowed, printed, or taxed

Within six months of taking office, Pres. Obama put the US on track to double its already staggering national deficit. The new debt, which will burden future generations, is immoral. And all of it in the name of fixing an economy broken by too much debt
in the first place.

Servicing the $11.5 trillion debt is a huge annual expenditure in the federal budget. Those who hold our debt, including foreign countries like China and Saudi Arabia, must be paid first. Last year we spent more than $400 billion to
service our debt. Is that what the president meant by "change"?

Where is all of this money going to come from? It can come from only three places. Government borrows it, government prints it, or government taxes the people for it. So far the
administration has done the first two. We've borrowed massive sums from foreign countries & we've also simply printed money. Economists call this practice "monetizing the debt," and it's not something we hear much about. Higher taxes won't be far behind.

We’re in the worst financial crisis since Great Depression

Q: Where do you stand on the financial recovery plan?

A: We are going through the worst financial crisis since the Great Depression. As we engage in this important rescue effort, we’ve got to make sure that we’ve got oversight over this whole process.
$700 billion, potentially, is a lot of money. We’ve got to make sure that taxpayers have the possibility of getting that money back--and gains--if & when the market returns. We’ve got to make sure none of that money is going to pad CEO bank accounts or t
promote golden parachutes. We’ve got to make sure we’re helping homeowners, because the root problem has to do with the foreclosures taking place all across the country. This is a final verdict on 8 years of failed economic policies--a theory that says w
can shred regulations & consumer protections and give more to the most, and somehow prosperity will trickle down. It hasn’t worked. The fundamentals of the economy have to be measured by whether or not the middle class is getting a fair shake.

Spending freeze is like a hatchet where you need a scalpel

Q: In the middle of a huge financial crisis that is yet to be resolved, how this is going to affect you not in small ways, but in major ways, and the approach you would take to the presidency.

McCAIN: How about a spending freeze on everything but Defense, Veterans Affairs and entitlement programs? We ought to seriously consider, with the exceptions of caring for our veterans, national defense and several other vital issues.

OBAMA: The problem with a spending freeze is you’re using a hatchet where you need a scalpel. There are some programs that are very important that are currently underfunded. I want to increase early childhood education.
We’re currently spending $10 billion a month in Iraq when they have a $79 billion surplus. It seems to me that if we’re going to be strong at home as well as strong abroad, that we’ve got to look at bringing that war to a close.

Deficit spending for $50B emergency economic plan

After Obama announced his emergency anti-recession program on July 31, he gave an interview. The NPR interviewer asked: "Your new emergency economic plan includes a $50 billion package. Where will this money come from?"

Obama explained, "When it comes to a stimulus package, typically you are not looking at offsets, because what you are trying to do is prevent the economy from going into a further tailspin."

NPR: "But with the deficit as high as it is right now, is
it responsible to propose something that is likely to increase deficit spending?"

Obama didn't flinch: "Well, Michele," he said, "understand that if we continue on the trends we're on right now, where unemployment keeps on going up, if you continue to
see an economic slide, that is going to cost far more in terms of tax revenues, because businesses aren't selling, taxes aren't being collected. And what we're going to end up with is a much worse situation when it comes to our deficit."

Barack Obama on Voting Record

Voted against limiting credit to 30%, because 30% too high

Clinton and Obama battled over their votes on bankruptcy bills and an amendment to cap interest charged on credit, at 30%. Obama claimed, “I thought 30% potentially was too high of a ceiling.”

Obama did vote against--and Clinton voted for--an amendment
that would have placed a 30% cap on the interest rate that could be charged on any extension of credit. The amendment failed by a vote of 74 to 24 in 2005. When the amendment came up for a vote, Obama was standing next to Sen. Paul Sarbanes,
D-MD, the senior Democrat on the banking committee and the leader of those opposing the landmark bill, which would make it harder for Americans to get rid of debt.

As for whether the 30% cap was too high, that’s certainly a matter of opinion.
Sen. Mark Dayton of Minnesota, sponsor of the amendment, said on the Senate floor that such a cap “is still consumer abuse” but is much better than rates of more than 300%, which he said were being charged by some loan operations in the country.

I opposed both the 2001 and 2005 bankruptcy bills

I opposed both the 2001 and 2005 bankruptcy bills. They were bad ideas, because they were pushed by the credit card companies, they were pushed by the mortgage companies, and they put the interests of those banks and financial institutions ahead
of the interests of the American people.

Source: 2008 Democratic debate in Las Vegas
, Jan 15, 2008

Voted NO on paying down federal debt by rating programs' effectiveness.

Amendment intends to pay down the Federal debt and eliminate government waste by reducing spending on programs rated ineffective by the Program Assessment Rating Tool (PART).

Proponents recommend voting YES because:

My amendment says we are going to take about $18 billion as a strong signal from the Congress that we want to support effective programs and we want the taxpayer dollars spent in a responsible way. My amendment doesn't take all of the $88 billion for the programs found by PART, realizing there may be points in time when another program is not meeting its goals and needs more money. So that flexibility is allowed in this particular amendment. It doesn't target any specific program.
Almost worse than being rated ineffective, we have programs out there that have made absolutely no effort at all to measure their results. I believe these are the worst offenders. In the following years, I hope Congress will look at those programs to create accountability.

Opponents recommend voting NO because:

The effect of this amendment will simply be to cut domestic discretionary spending $18 billion. Understand the programs that have been identified in the PART program are results not proven. Here are programs affected: Border Patrol, Coast Guard search and rescue, high-intensity drug trafficking areas, LIHEAP, rural education, child abuse prevention, and treatment. If there is a problem in those programs, they ought to be fixed. We ought not to be cutting Border Patrol, Coast Guard search and rescue, high-intensity drug trafficking areas, LIHEAP, rural education, and the rest. I urge a "no" vote.

Voted NO on $40B in reduced federal overall spending.

Vote to pass a bill that reduces federal spending by $40 billion over five years by decreasing the amount of funds spent on Medicaid, Medicare, agriculture, employee pensions, conservation, and student loans. The bill also provides a down-payment toward hurricane recovery and reconstruction costs.

Get minorities into home ownership & global marketplace.

Obama adopted the CBC principles:

The CBC is focused on economic empowerment issues including:

New Markets and Small and Minority Business Development. The CBC will seek to increase opportunities for minority and small and disadvantaged businesses by expanding contracting opportunities in the public and private sectors, increasing access to capital, creating tax incentives for capital improvements, removing outdated and restrictive regulatory barriers, and streamlining and enhancing procurement tools to encourage minority and small business utilization.

Trade and Global Economic Empowerment.
The CBC will work to ensure that the benefits of the dynamic global marketplace extend to minority businesses, and Africa and developing countries. To this end, the CBC will propose and support trade and investment initiatives designed to bridge the global digital divide, create jobs, improve infrastructure, promote sustainable development, and raise living and work standards for people of color around the globe. Moreover, the CBC will work to ensure that America’s international trade agenda and priorities also meet these goals.

Increasing Affordable Housing Opportunities. The CBC’s goal is to increase the nation’s homeownership rates. Home ownership is one of the best wealth creation vehicles for minority families. We will work with lending institutions and community organizations to ensure that minorities are afforded every opportunity to realize the dream of owning a home.

Require full disclosure about subprime mortgages.

Obama co-sponsored requiring full disclosure about subprime mortgages

Sen. DODD: Today we are facing a crisis in the mortgage markets on a scale that has not been seen since the Great Depression: over 2 million homeowners face foreclosure at a loss of over $160 billion in hard-earned home equity; over one out of every 5 subprime loans is currently delinquent. These high default rates have frozen the subprime and jumbo mortgage markets and infected the capital markets to the point where central banks around the world have had to inject liquidity into the system to avoid the crisis from spreading to other segments of the market.

One of the fundamental causes of this serious crisis is abusive and predatory subprime mortgage lending. The Homeownership Preservation and Protection Act of 2007 is designed to protect American homeowners from these practices, and prevent this disaster from happening again. The legislation will:

realign the interests of the mortgage industry with borrowers to insure the availability of mortgage capital on fair terms
both for the creation and sustainability of homeownership;

establish new lending standards to ensure that loans are affordable and fair, and

provide for adequate remedies to make sure the standards are met; and create a transparent set of rules for the mortgage industry so that capital can safely return to the market without bad lending practices driving out the good.

It is important to keep in mind that only about 10% of subprime mortgages have been made to first time home buyers. This market has not been primarily about creating a new set of homeowners; a majority of subprime loans have been refinances. While maintaining access to subprime credit on fair terms is important, too much of the subprime market has actually put the homes and home equity of American families at risk.

In the coming months, the housing crisis is going to get worse. We will need to continue to press lenders and servicers to provide real relief for homeowners threatened with foreclosure.

Reform mortgage rules to prevent foreclosure & bankruptcy.

Makes FY2008 appropriations for emergency needs of states and local governments to redevelop abandoned and foreclosed homes; and the Neighborhood Reinvestment Corporation for foreclosure mitigation activities.

Helping Families Save Their Homes in Bankruptcy Act of 2008 - Authorizes a bankruptcy plan for individuals with regular income to provide for payment of such claim for a period of up to 30 years. Creates a principal residence homestead exemption for debtors over 55 years of age.

Mortgage Disclosure Improvement Act of 2008 - Amends the Truth in Lending Act to set forth additional disclosure requirements governing any extensions of credit (not only mortgages) secured by the dwelling of a consumer.